NJ may face legal action from fired Sandy contractor

Feb. 25, 2014

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TRENTON — New Jersey fired its biggest Sandy contractor in December, but there are signs the divorce isn’t final.

A panel of lawmakers reviewing the dismissal of Louisiana-based Hammerman and Gainer Inc., learned Monday that litigation is possible, even after HGI was paid $37.6 million for its six months on the job.

The Senate Legislative Oversight Committee was told by Department of Community Affairs Commissioner Richard Constable that “it was deemed more appropriate by both parties to sever the relationship” after problems became apparent with the company’s performance.

HGI oversaw the problem-plagued Reconstruction, Rehabilitation, Elevation and Mitigation, or RREM, program, as well as a smaller program providing $10,000 grants to people to remain in their home county.

Constable said at the committee’s public hearing that the state Attorney General’s Office had instructed him to limit comments “regarding legal concerns.”

State Sen. Loretta Weinberg, D-Bergen, asked Constable if there is litigation between the state and the vendor.

“The lawyers are engaged, having discussions, between the AG’s Office and counsel with HGI,” Constable said. “I’m very circumspect in my remarks understandably.”

The Christie administration was effusive in its praise of HGI when the contract was awarded last May. Contract documents prepared by state officials said the bid indicated “a good overview of the tasks required to complete the scope of work.”

Constable downplayed the evaluation, however, saying HGI’s bid price of $68 million over three years was the biggest factor in deciding the award. The only other bidder, Tetra Tech, asked for nearly three times more money.

“It would have been irresponsible for the state to take the higher bidder,” he said.

But the state only allowed five days to accept contract bids, which Adam Gordon, staff attorney for the Fair Share Housing Center, called “a key reason” for only two bids to come in, restricting the ability of officials to get a better deal.

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Homeowners and lawmakers had long complained about HGI’s performance. The company did not respond to a request for comment.

“We obviously became aware of concerns that many members of the public had,” Constable said. “As with any contracting relationship, we discuss it and have a period to remedy. Again, I’m not going to get into the details, but ultimately it was deemed more appropriate by both parties to sever the relationship.”

State Sen. Jennifer Beck, R-Monmouth, said it was the right move.

“They performed poorly, and that’s being kind,” she said.

Constable also said the Sandy relief distribution program’s biggest obstacle is having too few dollars for too many needs.

He insisted, however, that New Jersey is not the only state having trouble and actually is performing well when compared to other jurisdictions dealing with the destruction wrought by the October 2012 storm.

“All the governments involved are having a tough time navigating the system,” Constable said.

Constable said the DCA is refining plans on how to distribute a $1.46 billion recovery allotment from the federal government. The proposal needs federal approval.

New Jersey was given less than half of New York’s $7.1 billion in funding, even though New Jersey’s $37 billion in damage was only slightly lesser than New York’s $42 billion.

Constable said federal mandates focused on preventing fraud and abuse in the RREM program require the state to closely account for the money, and there also are rules calling for environmental and historic reviews on every property. Those steps slow the flow of money to rebuilding work, he said.